1. The Respondent (“Shady Acres”) contracted the Applicant (“Silver Construction”) to undertake construction works on LR No. 209/20735 (“the suit property”) but it failed to pay for the work done leading to the filing of the suit. The parties recorded a consent on 14th December 2020 on the following terms:
1) THAT the Respondent to liquidate the amount owing to the Applicant being KES. 55,929,120.00 within 120 days of this consent.
2) THAT any sales proceeds received or receivable by the Respondent from the sale of any unit or apartment on LR No. 2096/20735 to be applied first in liquidating the Applicants claim.
3) THAT the matter be mentioned on 19th April 2022 to confirm compliance.
2. The matter came up again on 25th March 2021 and the parties recorded a consent order on the following terms:
1) That the Respondent to liquidate the amount owing to the Applicant being KES 55,929,120/= within 120 days.
2) That any sale proceeds received or receivable by the Respondent from the sale of any unit or apartment on L.R No. 209/20735 to be applied first in liquidating the Applicant’s claim.
3) That mention on 19th April 2021 to confirm compliance on a consent in interest.
3. Shady Acres did not comply with the consent order. Silver Construction instructed Galaxy Auctioneers (“the Auctioneers”) to proceed with recovery of KES. 55,932,120.00. The Auctioneers proceeded to attach moveables at the suit property as evidenced by the proclamation dated 14th February 2022.
4. The Objector (‘’Westpoint’’) filed the Notice of Motion 16th February 2022 under Order 22 Rule 51 of the Civil Procedure Rules objecting to the attachment. The application is supported by affidavit of its director, David Muriuki Mambo, sworn on 16th February 2022. Westpoint states that it is the registered owner of the suit property. It states that the suit property comprises apartments owed by it and third parties. He states that Shady Acres is not the owner of any apartment.
5. It goes on to state that Westpoint and Shady Acres had a contractual and business relationship during the development of the suit property with the former being the landowner and the latter being the developer. That the development is essentially complete and Westpoint agreed to accommodate some employees and agents of Shady Acres at its offices to complete some obligations. It avers that premises where the goods were proclaimed are occupied by the employees/agents of Shady Acres but the office furniture and equipment therein belongs to Westpoint. It contends that all the property that is attached and set out in the proclamation belongs to it.
6. Silver Construction opposed the application through the affidavit of its Manager in charge of Operations, Ghanshyam Shamji Pindoria, sworn on 2nd March 2022. He agreed that the suit property is owned by the Westpoint and that Silver Construction was the contractor. Silver Construction points out though both companies are related; that they have common directors and offices. It states that that the Westpoint has not shown that the proclaimed goods belong to it. It complains that the suit property is in their possession and it has not given an account of payments made either to the Respondent or to it or for its benefit.
7. Silver Construction presented its Notice of Motion dated 2nd March 2022 in which it seeks the following orders:
a) Spent.
b) That Summons do issue to the Directors of Shady Acres Ltd and WestPoint Realty limited to show cause why execution of the decree herein should not issue against L.R No. 209/20735.
c) That the Directors of Shady Acres Ltd and WestPoint Realty Ltd do give an account of proceeds of sale of units in L.R No. 209/20735 pursuant to the consent order made in court on 25th March 2021.
d) That an order do issue for the Respondent to pay interest on the outstanding sums as per the contract until payment in full.
e) That costs of the application and consequent orders be met by the Respondent.
8. Westpoint opposed the application by Grounds of Opposition dated 15th March 2022 on the grounds that it is not a party to the proceedings herein and that there is no decree in favour of Silver Construction against it to warrant the adverse orders being sought.
9. I will deal with the Westpoint’s application as it is first in time. In an objection application under Order 22 Rule 51 of the Rules, the applicant must demonstrate that it has a legal or equitable interest in the whole of or part of any property attached in execution of a decree. The onus is squarely on the objector to demonstrate a legal or equitable interest in the whole or part of any of the attached property and it is not for the decree-holder to prove that the goods belong to the judgment debtor.
10. The basis of Westpoint’s application is that it owns the suit premises where the goods were attached and it only permitted Shady Acres to use the premises. Apart from producing its Certificate of Incorporation and the title deed to the suit property, it has not produced anything else to show that it owns the moveable properties. There is no dispute that there is a relationship between Shady Acres and Westpoint but this does not discharge Westpoint, as an objector, from affirmatively proving that the attached properties belong to it. It could have shown evidence of purchase for some of the items or an agreement of Shady Acres allowing it use the premises and its equipment. From the material on record, the court cannot tell whether the equipment belongs to Shady Acres or to Westpoint. A fact is not proved if it is neither proved nor disproved. The objection therefore fails.
11. Turning to the application by Silver Construction, the gravamen of the application is that while the suit property is registered in the name of Westpoint, Westpoint and Shady Acres are sister companies with common directors. That Westpoint has been in possession of the development undertaken by Silver Construction and it has failed to give account of payments in compliance to the consent order of 25th March 2021. Shady Acres was further required to give priority to Silver Construction for any unit sold in the suit premises. That WestPoint and Shady acres are circumventing the court and justice process as they have all along dealt with the property as a joint ownership and there is therefore need to summon the directors to show cause why execution should not issue against the suit property. Silver Construction now seeks the court to allow it to execute the decree against the property.
12. The consent order in this matter is between Silver Construction and Shady Acres. I agree with Westpoint that it is not a party to the suit and there no ground that has been advanced to join it at this stage where the matters were settled by consent of the parties. Apart from paying the agreed sum, I understand the only issue for resolution seems to be the outstanding interest. Whether Westpoint should give an account and be held liable is an entirely new cause of action based on the contracts between the parties and their relationship which the court would have to resolve first. I therefore reject any attempt to introduce Westpoint and its directors into this matter.
13. On the other hand, Shady Acres is liable for the debt. Their director ought to be examined on the means of the company and determine whether in fact they should be personally liable. I therefore allow the application to the extent that it seeks to examine the director of Shady Acres; David Muriuki Mambo and Rose Mambo Muriuki.
14. For the reasons I have stated above, I make the following orders:
(a) The Notice of Motion dated 16th February 2022 be and is hereby dismissed with costs to the Applicant with costs assessed to KES. 30,000.00.
(b) The Notice to Motion dated 2nd March 2022 is allowed only to the extent that the directors of Shady Acres Limited; David Muriuki Mambo and Rose Mambo are to be summoned to court for examination on the means of the company to satisfy the debt and in that regard they shall furnish the Court, the annual reports, books of accounts and other document as may be requested by the Applicant.
(c) In default of compliance with order (b) above, the applicant may proceed with execution against the said directors personally.
(d) The Respondent shall bear the Applicant’s costs.
DATED and DELIVERED at NAIROBI this 24th day of JUNE 2022.
D. S. MAJANJA
JUDGE
1) THAT the Respondent to liquidate the amount owing to the Applicant being KES. 55,929,120.00 within 120 days of this consent.
2) THAT any sales proceeds received or receivable by the Respondent from the sale of any unit or apartment on LR No. 2096/20735 to be applied first in liquidating the Applicants claim.
3) THAT the matter be mentioned on 19th April 2022 to confirm compliance.
2. The matter came up again on 25th March 2021 and the parties recorded a consent order on the following terms:
1) That the Respondent to liquidate the amount owing to the Applicant being KES 55,929,120/= within 120 days.
2) That any sale proceeds received or receivable by the Respondent from the sale of any unit or apartment on L.R No. 209/20735 to be applied first in liquidating the Applicant’s claim.
3) That mention on 19th April 2021 to confirm compliance on a consent in interest.
3. Shady Acres did not comply with the consent order. Silver Construction instructed Galaxy Auctioneers (“the Auctioneers”) to proceed with recovery of KES. 55,932,120.00. The Auctioneers proceeded to attach moveables at the suit property as evidenced by the proclamation dated 14th February 2022.
4. The Objector (‘’Westpoint’’) filed the Notice of Motion 16th February 2022 under Order 22 Rule 51 of the Civil Procedure Rules objecting to the attachment. The application is supported by affidavit of its director, David Muriuki Mambo, sworn on 16th February 2022. Westpoint states that it is the registered owner of the suit property. It states that the suit property comprises apartments owed by it and third parties. He states that Shady Acres is not the owner of any apartment.
5. It goes on to state that Westpoint and Shady Acres had a contractual and business relationship during the development of the suit property with the former being the landowner and the latter being the developer. That the development is essentially complete and Westpoint agreed to accommodate some employees and agents of Shady Acres at its offices to complete some obligations. It avers that premises where the goods were proclaimed are occupied by the employees/agents of Shady Acres but the office furniture and equipment therein belongs to Westpoint. It contends that all the property that is attached and set out in the proclamation belongs to it.
6. Silver Construction opposed the application through the affidavit of its Manager in charge of Operations, Ghanshyam Shamji Pindoria, sworn on 2nd March 2022. He agreed that the suit property is owned by the Westpoint and that Silver Construction was the contractor. Silver Construction points out though both companies are related; that they have common directors and offices. It states that that the Westpoint has not shown that the proclaimed goods belong to it. It complains that the suit property is in their possession and it has not given an account of payments made either to the Respondent or to it or for its benefit.
7. Silver Construction presented its Notice of Motion dated 2nd March 2022 in which it seeks the following orders:
a) Spent.
b) That Summons do issue to the Directors of Shady Acres Ltd and WestPoint Realty limited to show cause why execution of the decree herein should not issue against L.R No. 209/20735.
c) That the Directors of Shady Acres Ltd and WestPoint Realty Ltd do give an account of proceeds of sale of units in L.R No. 209/20735 pursuant to the consent order made in court on 25th March 2021.
d) That an order do issue for the Respondent to pay interest on the outstanding sums as per the contract until payment in full.
e) That costs of the application and consequent orders be met by the Respondent.
8. Westpoint opposed the application by Grounds of Opposition dated 15th March 2022 on the grounds that it is not a party to the proceedings herein and that there is no decree in favour of Silver Construction against it to warrant the adverse orders being sought.
9. I will deal with the Westpoint’s application as it is first in time. In an objection application under Order 22 Rule 51 of the Rules, the applicant must demonstrate that it has a legal or equitable interest in the whole of or part of any property attached in execution of a decree. The onus is squarely on the objector to demonstrate a legal or equitable interest in the whole or part of any of the attached property and it is not for the decree-holder to prove that the goods belong to the judgment debtor.
10. The basis of Westpoint’s application is that it owns the suit premises where the goods were attached and it only permitted Shady Acres to use the premises. Apart from producing its Certificate of Incorporation and the title deed to the suit property, it has not produced anything else to show that it owns the moveable properties. There is no dispute that there is a relationship between Shady Acres and Westpoint but this does not discharge Westpoint, as an objector, from affirmatively proving that the attached properties belong to it. It could have shown evidence of purchase for some of the items or an agreement of Shady Acres allowing it use the premises and its equipment. From the material on record, the court cannot tell whether the equipment belongs to Shady Acres or to Westpoint. A fact is not proved if it is neither proved nor disproved. The objection therefore fails.
11. Turning to the application by Silver Construction, the gravamen of the application is that while the suit property is registered in the name of Westpoint, Westpoint and Shady Acres are sister companies with common directors. That Westpoint has been in possession of the development undertaken by Silver Construction and it has failed to give account of payments in compliance to the consent order of 25th March 2021. Shady Acres was further required to give priority to Silver Construction for any unit sold in the suit premises. That WestPoint and Shady acres are circumventing the court and justice process as they have all along dealt with the property as a joint ownership and there is therefore need to summon the directors to show cause why execution should not issue against the suit property. Silver Construction now seeks the court to allow it to execute the decree against the property.
12. The consent order in this matter is between Silver Construction and Shady Acres. I agree with Westpoint that it is not a party to the suit and there no ground that has been advanced to join it at this stage where the matters were settled by consent of the parties. Apart from paying the agreed sum, I understand the only issue for resolution seems to be the outstanding interest. Whether Westpoint should give an account and be held liable is an entirely new cause of action based on the contracts between the parties and their relationship which the court would have to resolve first. I therefore reject any attempt to introduce Westpoint and its directors into this matter.
13. On the other hand, Shady Acres is liable for the debt. Their director ought to be examined on the means of the company and determine whether in fact they should be personally liable. I therefore allow the application to the extent that it seeks to examine the director of Shady Acres; David Muriuki Mambo and Rose Mambo Muriuki.
14. For the reasons I have stated above, I make the following orders:
(a) The Notice of Motion dated 16th February 2022 be and is hereby dismissed with costs to the Applicant with costs assessed to KES. 30,000.00.
(b) The Notice to Motion dated 2nd March 2022 is allowed only to the extent that the directors of Shady Acres Limited; David Muriuki Mambo and Rose Mambo are to be summoned to court for examination on the means of the company to satisfy the debt and in that regard they shall furnish the Court, the annual reports, books of accounts and other document as may be requested by the Applicant.
(c) In default of compliance with order (b) above, the applicant may proceed with execution against the said directors personally.
(d) The Respondent shall bear the Applicant’s costs.
DATED and DELIVERED at NAIROBI this 24th day of JUNE 2022.
D. S. MAJANJA
JUDGE